Ranchers Brace for Tough Times as Pandemic Hits Beef Industry

By Travis Bubenik, Courthouse News Service

Some worry the coronavirus pandemic’s financial toll on Texas ranchers could wind up rivaling the impacts of a devastating drought from almost a decade ago.

Cattle are pictured near Marfa, Texas, a town that was known for its historic ranching culture long before it was reborn as an international arts destination. (Travis Bubenik / Courthouse News)

MARFA, Texas (CN) — Long before the tiny West Texas town of Marfa was reborn as an international arts destination, largely thanks to the arrival of a high-profile New York artist in the 1970s, this rugged, mountainous corner of the state was cattle country through and through.

It was in fact nearly a century before Donald Judd began turning an old army fort into a minimalist art mecca that ranchers launched their own transformative project here, filling the high-desert landscape with thousands of cattle and spawning an almost mythic western culture that has persisted for generations.

That history was famously memorialized in the classic 1950s western “Giant,” shot at a local ranch.

“What Texas once was, Marfa still is,” Texas Monthly later declared in a 1977 profile of the town and its colorful cast of close-knit ranching families.

Though Marfa’s economy these days arguably depends more on high art-minded Airbnb dwellers than the price of cattle, the ranchers are still here. But their storied industry, like so many others, has now found itself suddenly in the crosshairs of the coronavirus pandemic.

Covid-19 outbreaks at meatpacking plants across the U.S. have disrupted beef supply chains and sent cattle prices plummeting in recent months.

“It’s not good times,” David Williams, manager of the local MacGuire Ranch, said in an interview. “It’s just depressing some days, you don’t even want to get out of bed and go do anything.”

So far, this part of Texas has been mostly spared from the virus itself. Only a couple local cases of Covid-19 have been identified, though testing has been limited.

Still, some worry the pandemic’s financial toll on ranchers could wind up rivaling the impacts of a devastating drought from almost a decade ago, the state’s worst on record. “Abnormally dry” conditions have already started to develop here, according to the U.S. Drought Monitor.

“My gut’s telling me it’s going to be worse than the 2011 stuff,” Williams said. “If we don’t get rain, it’s just going to devastate everybody in this area.”

The problems from the pandemic are rooted in basic supply-chain economics: as some of the nation’s largest meatpacking plants were forced to slow or altogether stop their operations in recent weeks, the number of cattle being slaughtered fell dramatically.

Weekly cattle slaughter numbers in the U.S. fell by about 250,000 from late March to the end of April before rebounding this month to about half of where they were before the drop, according to data from the Livestock Marketing Information Center.

“There’s plenty of cattle here, there’s plenty available, it’s just that it’s getting slaughtered at a much, much slower level,” said Katelyn McCullock, the center’s director.

The resulting bottleneck of cattle in the production pipeline made the animals worth much less than they would have been without the disruptions, a harsh reality for ranchers who have had to sell cattle in this environment and for those who will now have to spend more on feed and other logistics while they hold onto their animals and wait for prices to improve.

Rancher Carroll R. Gates, husband of Tyler Lyda Gates, pictured at one of the family’s properties in southeastern New Mexico in 2013. The family also ranches land in parts of Far West Texas. (Photo courtesy of Tyler Lyda Gates)

“Unfortunately, they’re just not valuable, because there’s nowhere to process them,” said Tyler Lyda Gates, a rancher who runs cattle on the sprawling La Escalera Ranch, partly located south of Fort Stockton, Texas. The Lydas are among the nation’s top 100 largest landowning families, according to the Land Report magazine.

“That’s what’s happening with the pork as well, they’re too big,” Gates said.

A similar glut of hogs in the pork industry has forced some producers to cull their numbers by whatever means possible, sometimes gassing them or simply shooting them.

Gates said she doesn’t expect to see the same thing happen with cattle, because as calves age past their prime they still retain value for hamburger meat. But waiting to sell is an economic hit, since ranchers can profit more off animals that can be used for pricier cuts.

“You’re not going to get a tender steak off an older animal,” Gates said.

“All this stuff is a balancing act,” said Joe Outlaw, co-director of the Agriculture and Food Policy Center at Texas A&M University. “It’s a really efficient system when everything’s working well, but when you have people getting sick so they can’t run a full shift in a plant, then that backs up supplies.”

The hurt hasn’t necessarily been felt by all ranchers, Outlaw cautioned. Those that typically don’t sell at this time of year might able to hunker down until prices rebound, a more likely prospect now that restaurants around the country have started reopening.

President Donald Trump’s order in late April forcing meatpacking plants to stay open despite the risks of the virus likely prevented an even worse slaughter backlog from developing, while Congress and the president have made billions in federal aid available to farmers and ranchers across the ag sector.

Still, the cattle market’s recovery largely depends on meatpackers being able to make up for lost time while also preventing further spikes in infections and deaths among workers. At least 20 meatpacking workers have died from Covid-19 this year, according to the United Food and Commercial Workers International Union, and secrecy from the companies running the plants has led to an unclear picture of exactly how many workers have been infected.

Major packers like Tyson Foods and JBS Beef have instituted a variety of new safety, sanitation and social distancing measures at their plants, though the food workers’ union has suggested those measures aren’t enough.

“I think this is going to go on for a long time,” said David Anderson, an agriculture economist at Texas A&M. “Let’s say in a few months coronavirus is gone. Would you go back to running the plant before it ever occurred, or would some of these things go into practice as being routine?”

“If that’s the case, maybe we run slower,” he said.

The effects of the pandemic have also enflamed a long-running sentiment among some ranchers that major meatpacking companies wield too much power over the industry and don’t adequately pay cattle producers – particularly smaller ones – for their work.

“Yeah, we now have a problem with our processing plants, but the ranchers have been getting messed over by the packers for a long time,” said Gates. “It’s kind of a monopoly, really, because there’s really only so many of the large plants.”

The path forward for cattle markets will depend largely on whether meatpacking plants can catch up with a backlog of animals waiting for slaughter. (Travis Bubenik / Courthouse News)

“They own everything, so they control everything,” she said.

Some in the industry have even accused the plants of illegal price-fixing during the pandemic, an accusation that’s apparently gaining traction. Multiple states and the federal government are investigating the claim, as the Big Bend Sentinel recently reported.

Rancher Bobby McKnight has seen plenty of ups and downs in the industry before.

The lifelong resident of Far West Texas called the recent drop in prices “historic,” but as he tells it, the day-to-day job itself hasn’t changed much during the pandemic.

“We still get up and go to work,” he said. “In this business, we can’t hit the pause button.”

McKnight, who leads the prominent trade group Texas and Southwestern Cattle Raisers Association, said meatpackers are doing “the best they can” to speed up slaughters and have so far gotten back up to about 75% of their slaughtering capacity.

“We’ve just got a big supply of cattle basically just trying to go through an hourglass,” he said. “I think we will get back to 100% capacity, but again the unknown is what’s so difficult.”

“It’s a finely tuned machine that hums along, and when it gets disrupted it ripples all through,” said Chip Love, a local rancher, president of the Marfa National Bank and occasional movie star. (Love played the part of the first person killed by the villainous Anton Chigurh in the Cohen brothers’ 2007 film “No Country for Old Men.”)

Ranchers are no stranger to adversity, Love said. They always know they might have to bite the bullet one year and start looking ahead to the next.

“We can stand a lot of different things,” Love said, before pausing for a moment. “If it rains.”

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